NYRA near deal for $30M bailout

OZONE PARK, N.Y. - The New York Racing Association and Gov. George Pataki are close to agreeing to a $30 million deal that would bail out the racing association from its current financial crisis and keep it from filing for bankruptcy.

NYRA officials thought they had a deal completed Tuesday night, NYRA president Charles Hayward said Wednesday afternoon, but "in working out the details there's been some further discussions necessary."

Terms of the deal were not announced, but Hayward confirmed that "it adds up to be a $30 million package," similar to a proposal floated last week by New York Senate Majority Leader Joseph Bruno.

Hayward said that $5 million would come from a sale of property at Aqueduct to the Port Authority of New York and New Jersey. The exact location of the property is in question; however, NYRA officials have expressed concerns about relinquishing property used for parking spaces for horsemen and fans.

Published reports said that another $5 million would be in the form of a loan from the Empire State Development Corp., contingent on NYRA's giving assurances it would race uninterrupted in 2006. Presumably, the state would loan NYRA the remaining $20 million.

The $30 million package would allow NYRA to operate until revenue from its video lottery terminal casino at Aqueduct begins to roll in, late in 2006. The VLT project, on hold since Aug. 7, 2003, is still awaiting final approval from the New York State Lottery. NYRA plans to install 4,500 VLT's on the second floor of Aqueduct's grandstand.

NYRA officials are hoping that part of Pataki's deal would include getting the State Lottery to sign off on the VLT project.

"It's hard for us to agree to a deal with a moving window for VLT's," Hayward said.

Hayward said that distribution of funds on an as-needed basis is another point of contention. Under the proposed deal, NYRA would not get a lump-sum payment but instead would have to seek approval for the withdrawal of funds from the NYRA Oversight Board, set up by state officials last summer to monitor NYRA's operations.

"The distribution of money is one of the things that we're talking about," Hayward said.

At a press briefing in Albany on Wednesday, Pataki said, "We have made what I think is a very fair and appropriate offer to have the state advance funds against their VLT revenues with oversight, because we want to continue racing in an orderly manner as we look toward the future, as in what happens after 2007 when the franchise is up."

NYRA has the franchise to operate racing at Aqueduct, Belmont, and Saratoga through Dec. 31, 2007. There will be an open bidding process for the franchise, a process that Bruno has suggested get under way within six months.

Pataki added that he feels it's in the state's and NYRA's best interests "to not in any way jeopardize the future of racing."

NYRA has threatened to file for bankruptcy by Friday, contending that without assistance from the state it would run out of money to operate. Hayward has continually said that a bankruptcy filing could be beneficial to NYRA but is not the preferred option.

"I'd rather continue to work with the state and get something done," Hayward said. "That's a better alternative."

One of the potential benefits to NYRA in filing for bankruptcy, Hayward has said, is that a federal bankruptcy court judge could rule on the question of who owns the land on which Aqueduct, Belmont, and Saratoga sit.

NYRA and the state both have laid claim to the property, an issue that Pataki addressed again Wednesday at his press briefing.

"To us, it's very clear that the state of New York owns the tracks," Pataki said. "I think they would dispute that, but we believe quite clearly that the law states that. That's something that I would like to see resolved in an orderly manner as we look to the future of racing in some rational, objective way as opposed to through any confrontational way."

Hayward said that "ownership of the land is not part of these discussions."